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Episode Info: Qualified Opportunity Zones were created in the 2017 tax plan passed by congress. Following is from my second conversation with Real Estate Accountant, Jonathan McGuire, from Aldrich Advisors. In this we dive into the clarifications provided Treasury Department draft proposal of proposed regulations. Eventually, final regulations will follow. In the second round, a path from inception to exit strategy has been made clear. On CREPN Radio episode #158 Round I, Jonathan explained what Qualified Opportunity Zones were and their purpose. For investors with a capital gain, from any investment, they could invest with a temporary deferral on the owed tax if they stayed in for 5 or 7 years. If they stayed in 10 plus years, the subsequent gain on the investment in the Qualified Opportunity Zone is TAX FREE. Click the link to download your Qualified Opportunity Zone Explanation Temporary Gain Deferral Temporary Gain Deferral is the initial benefit to investors with capital gains who reinvest their gain into a Qualified Opportunity Fund that invest in a Qualified Opportunity Zone. The QOZ deferral program last until December 31, 2026 at which time, the deferred tax becomes due. Discount on the Original Capital Gain If the investor holds the investment for: 5 years by 12/31/2026, the investor receives a 10% discount on the basis for which tax is owed. 7 years by 12/31/2026, the investor receives a 15% discount on the basis for which tax is owed TAX FREE BONUS If the investor holds the investment for more than 10 years, ALL SUBSEQUENT GAINS ARE TAX FREE! Round II Clarifications: Use inside the Qualified Opportunity Zones - Originally, the understanding was specific to the real estate; new construction, or substantially improved. The round II clarified that tenants in a QOZ can also take advantage of the tax laws. TAX FREE GAIN End Date Round II clarified the end date for the free bonus on the subsequent gain. The 100% tax free subsequent gain ends in 2047. Previously, there was no recognized end date attached to this. This will likely create another anniversary date for additional market activity. Fund Rules Fund Rules require that 90% of assets held by opportunity zone fund must be invested in qualified opportunity zone stock, partnership or property. And, at least 70% of the property inside of the business, etc must be qualified, ie: acquired after 12/17, substantial improvement, original use inside the QOZ, etc. More Clarifications: Land will always have original use. This clarification reduces the amount of substantial improvement required, due to the subtraction of the land value from the purchase price. The reference point for determining the value of the land is the county assessor tax record. QOZ allows you to separately recognize the true economic value of the structure and land. By lowering the value of the structure, this lowers the amount of substantial improvement needed to...

Episode Info: Qualified Opportunity Zones were created in the 2017 tax plan passed by congress. Following is from my second conversation with Real Estate Accountant, Jonathan McGuire, from Aldrich Advisors. In this we dive into the clarifications provided Treasury Department draft proposal of proposed regulations. Eventually, final regulations will follow. In the second round, a path from inception to exit strategy has been made clear. On CREPN Radio episode #158 Round I, Jonathan explained what Qualified Opportunity Zones were and their purpose. For investors with a capital gain, from any investment, they could invest with a temporary deferral on the owed tax if they stayed in for 5 or 7 years. If they stayed in 10 plus years, the subsequent gain on the investment in the Qualified Opportunity Zone is TAX FREE. Click the link to download your Qualified Opportunity Zone Explanation Temporary Gain Deferral Temporary Gain Deferral is the initial benefit to investors with capital gains who reinvest their gain into a Qualified Opportunity Fund that invest in a Qualified Opportunity Zone. The QOZ deferral program last until December 31, 2026 at which time, the deferred tax becomes due. Discount on the Original Capital Gain If the investor holds the investment for: 5 years by 12/31/2026, the investor receives a 10% discount on the basis for which tax is owed. 7 years by 12/31/2026, the investor receives a 15% discount on the basis for which tax is owed TAX FREE BONUS If the investor holds the investment for more than 10 years, ALL SUBSEQUENT GAINS ARE TAX FREE! Round II Clarifications: Use inside the Qualified Opportunity Zones - Originally, the understanding was specific to the real estate; new construction, or substantially improved. The round II clarified that tenants in a QOZ can also take advantage of the tax laws. TAX FREE GAIN End Date Round II clarified the end date for the free bonus on the subsequent gain. The 100% tax free subsequent gain ends in 2047. Previously, there was no recognized end date attached to this. This will likely create another anniversary date for additional market activity. Fund Rules Fund Rules require that 90% of assets held by opportunity zone fund must be invested in qualified opportunity zone stock, partnership or property. And, at least 70% of the property inside of the business, etc must be qualified, ie: acquired after 12/17, substantial improvement, original use inside the QOZ, etc. More Clarifications: Land will always have original use. This clarification reduces the amount of substantial improvement required, due to the subtraction of the land value from the purchase price. The reference point for determining the value of the land is the county assessor tax record. QOZ allows you to separately recognize the true economic value of the structure and land. By lowering the value of the structure, this lowers the amount of substantial improvement needed to...Read less